Press release
Hackett Research: Largest U.S. Companies Improve Working Capital Performance in 2021 as Revenue, Profit Margins, And More Bounce Back to Pre-Pandemic Levels
Despite Performance Gains in Payables, Receivables, and Inventory, Improvement Opportunity Grew by 28%, to $1.7 Trillion MIAMI & LONDON--(BUSINESS WIRE)--
About this update from The Hackett Group, Inc.
[{"type":"text","content":"\nDespite Performance Gains in Payables, Receivables, and Inventory, Improvement Opportunity Grew by 28%, to $1.7 Trillion\n\n MIAMI & LONDON--(BUSINESS WIRE)--\nFor the first time in a decade, the 1000 largest public companies in the U.S. improved performance of all three major working capital components last year – they managed inventory more effectively, collected from customers faster, and took longer to pay suppliers, according to the 2022 Working Capital Survey from The Hackett Group, Inc. (NASDAQ: HCKT). But despite this triple improvement, the overall working capital improvement opportunity increased substantially.\n\nThe Hackett Group®’s 2022 Working Capital Survey is currently featured on CFO.com. A summary of the research findings, including detailed industry analysis and working capital improvement recommendations, is available on a complimentary basis, with registration, at this link: http://go.poweredbyhackett.com/wcs22sm.\n\nAfter a tumultuous year in 2020, which saw major operational and financial disruptions across most industries, performance and liquidity did more than just move back to pre-pandemic levels in 2021. The three key measures of working capital – days payables outstanding (DPO), days sales outstanding (DSO), and days inventory outstanding (DIO) – all trended positively for the year. DPO improved by .5%, from 61.9 days to 62.2 days. DSO improved by 2%, from 41.7 days to 40.6 days. Finally, DIO improved by 2%, from 56.7 days to 55.7 days.\n\nSpurred by a 22% increase in revenues as companies bounced back from the early stages of the pandemic, companies also saw a 12% improvement in EBITDA margins, a dramatic increase following a 4% drop in 2020. “Companies managed to remain profitable despite raw material and labor pressure, accelerating their digital transformation to improve productivity, and reconfiguring their offerings to maintain profitability,” said The Hackett Group Director István Bodó.\n\nExcess working capital grew substantially in 2021, far outpacing the revenue increase. According to The Hackett Group’s analysis, the top 1,000 companies have nearly $1.7 trillion tied up in excess working capital. That’s up 28% from $1.29 trillion in 2020. The opportunity includes $627 billion in inventory, $533 billion in receivables, and $498 billion in payables.\n\nTop performers by industry now conver...